GBP/USD Testing Key Resistance As the Pound Recovers From Multi-Decade Lows

GBP/USD Testing Key Resistance As the Pound Recovers From Multi-Decade Lows
Written by:
Michael Harris
25th March, 13:41
Updated: 3rd April, 04:36
  • GBP/USD recovering after printing multi-decade lows last week
  • Chancellor Sunak warns that the Government won’t be able to save every business
  • He also says that a bailout for airlines is seen as the last resort

GBP/USD has surged more than 1% today, in addition to 1.84% gains made yesterday, as the cable continues to push after hitting the multi-decade lows last week. In the meantime, the UK Chancellor Sunak has ruled out direct support to airlines.

Fundamental analysis: We won’t be able to save every business, warns Chancellor

UK Chancellor Rishi Sunak has issued a warning that the Government won’t be able to save all businesses. He added that his cabinet is working on schemes to support self-employed workers, but that process will take longer.

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“Despite the significant economic interventions we have put in place, we will not be able to protect every single job or save every single business,” Mr Sunak said.

Earlier, The Government announced plans to pay 80% of workers’ salaries up to £2,500 per month, which drew criticism from the opposition MPs that the Government is not taking care of those who are self-employed.

“The issue with a scheme like this is that looking at historic tax return data from a year-and-a-half ago gives absolutely no guide to whether someone today who is self-employed is in the situation that they are prosperous and that their income is increasing versus someone who is not,” the chancellor added.

Moreover, Sunak has ruled out government help for struggling airlines in the short-term. This option will only be realistic if all other options are exhausted, warned Sunak.

Sunak also joined the Bank of England (BOE) Governor Andrew Bailey and the interim Chief Executive of the Financial Conduct Authority, Chris Woolard, in addressing a joint letter to major banks asking them to keep supporting the economy.

“This will require a willingness to maintain and extend lending despite the uncertain economic conditions. We must ensure that firms whose business models were viable before this crisis remain viable once it is over.”

Technical analysis: Testing key resistance

GBP/USD has gained nearly 3% in the last two days as the pair recovers from the multi-decade lows below the $1.15 handle. The price action has now come back to test the broken support around the $1.19 handle, now in the context of resistance.

GBP/USD daily chart (TradingView)

As seen in the chart, the block between $1.1870 and $1.1970 is a crucial area for GBP/USD. A move, and close, above this block opens the way for higher levels near the $1.22 mark. On the downside, the lows around $1.14 will continue to be a major target for the bears.

Summary

GBP/USD has started to recover from the multi-decade lows after the pair printed a 35-year low near the $1.14 handle. The price is now approaching the $1.19 mark, which is the key resistance for GBP/USD.

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